Case Note & Summary
The petitioner, Mankastu Impex Private Limited, an Indian company, and the respondent, Airvisual Limited, a Hong Kong company, entered into a Memorandum of Understanding (MoU) on 12.09.2016 for the exclusive distribution of air quality monitors in India. Disputes arose when IQAir AG acquired the respondent's assets and discontinued the product line. The petitioner invoked the arbitration clause (Clause 17) and filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator. The respondent contended that the seat of arbitration was Hong Kong, as per Clause 17.2, and thus Indian courts had no jurisdiction. The Supreme Court examined Clause 17.2, which stated 'the place of arbitration shall be Hong Kong' and that disputes 'shall be referred to and finally resolved and administered in Hong Kong'. The Court held that the use of 'place' along with 'administered' clearly designates Hong Kong as the juridical seat, not merely a venue. Consequently, Part-I of the Act does not apply, and the petition under Section 11 is not maintainable. The Court dismissed the petition, leaving the petitioner to pursue arbitration in Hong Kong as per the agreed terms.
Headnote
A) Arbitration Law - Seat vs. Venue - Interpretation of Arbitration Clause - Section 11(6), Arbitration and Conciliation Act, 1996 - Dispute arose from MoU between Indian company and Hong Kong company; Clause 17.2 stated 'place of arbitration shall be Hong Kong' and disputes 'shall be referred to and finally resolved and administered in Hong Kong' - Court held that the expression 'place of arbitration' coupled with 'administered in Hong Kong' clearly indicates that Hong Kong is the juridical seat, not merely a venue - Therefore, Part-I of the Act is inapplicable and Indian courts lack jurisdiction to appoint arbitrator under Section 11 (Paras 14-18).
Issue of Consideration
Whether, in view of Clause 17.2 of the MoU, the parties have agreed that the seat of arbitration is at Hong Kong and whether this Court lacks jurisdiction to entertain the present petition filed under Section 11 of the Arbitration and Conciliation Act, 1996.
Final Decision
The Supreme Court dismissed the petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, holding that the seat of arbitration is Hong Kong and Indian courts lack jurisdiction to appoint an arbitrator. The petitioner is at liberty to pursue arbitration in Hong Kong as per the agreed terms.
Law Points
- Seat of arbitration
- Venue vs. Seat
- International Commercial Arbitration
- Section 11(6) Arbitration and Conciliation Act
- 1996
- Part-I applicability
- Exclusive jurisdiction clause
Case Details
Arbitration Petition No. 32 of 2018
Vikas Dutta for petitioner, Ritin Rai for respondent
Mankastu Impex Private Limited
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Nature of Litigation
Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of sole arbitrator in an international commercial arbitration dispute.
Remedy Sought
Petitioner sought appointment of a sole arbitrator under Clause 17.2 of the MoU dated 12.09.2016.
Filing Reason
Dispute arose after IQAir AG acquired respondent's assets and discontinued the product line, leading to alleged breach of the MoU.
Previous Decisions
Delhi High Court passed an interim order under Section 9 restraining respondent from selling products in India; petition under Section 9 is pending.
Issues
Whether the seat of arbitration is Hong Kong or India based on Clause 17.2 of the MoU.
Whether Indian courts have jurisdiction to appoint arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
Submissions/Arguments
Petitioner argued that Clause 17.1 makes MoU governed by Indian law and courts at New Delhi have jurisdiction; Hong Kong is only a venue, not seat.
Respondent argued that Clause 17.2 clearly states place of arbitration is Hong Kong and disputes shall be administered in Hong Kong, making it the seat; Part-I of Act inapplicable.
Ratio Decidendi
The expression 'place of arbitration shall be Hong Kong' coupled with 'administered in Hong Kong' in Clause 17.2 of the MoU clearly indicates that the parties agreed Hong Kong as the juridical seat of arbitration, not merely a venue. Therefore, Part-I of the Arbitration and Conciliation Act, 1996 does not apply, and Indian courts have no jurisdiction under Section 11 to appoint an arbitrator.
Judgment Excerpts
The question falling for consideration in the present case is, in view of Clause 17.2 of the MoU whether the parties have agreed that the seat of arbitration is at Hong Kong and whether this Court lacks jurisdiction to entertain the present petition filed under Section 11 of the Arbitration and Conciliation Act, 1996.
The expression used in Clause 17.2 which provides 'the place of arbitration shall be Hong Kong', in addition to also providing that 'all disputes arising out of the MoU shall be referred to and finally resolved and administered in Hong Kong' clearly shows that the parties have agreed that the arbitration between the parties would be seated in Hong Kong and therefore, Part-I is not applicable and Section 11 has no application to the present dispute.
Procedural History
Petitioner filed Section 9 petition in Delhi High Court on 11.12.2017; interim order granted on 28.02.2018. Petitioner issued arbitration notice on 08.12.2017; respondent replied on 05.01.2018 stating arbitration must be in Hong Kong. Petitioner then filed Section 11(6) petition in Supreme Court on 2018.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 11(6), Section 11(9), Section 2(1)(f), Section 9, Section 20(1)
